“We don’t give the loan to get refunded! The purpose is to defeat poverty,” Bernard exclaimed while reminding that the refund rate is in fact more than 99.9%.
An example is the family of Madam Xiêu from Ninh Phước District, Ninh Thuận province, one of the poorest areas of Vietnam’s central coastal region. With moneylenders demanding 10% interest a month, the €110 microloan from Mekong Plus freed her from the burden of repayment, allowing her to save an additional €10 a month. An amount seemingly small from the lens of the developed world, the additional cash goes into invaluable repairs on her home.
As a general guideline, Mekong Plus keeps microloans interest free for the first three years. After that, a transitional period begins when beneficiaries of the scheme begin paying low interest rates.
“Little by little we want them to get used to borrowing and investment when they leave our system for the state banks,” Bernard explained the philosophy behind this decision.